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Dating from the 1970s, the 421a Program gave real estate developers tax breaks as an incentive to build in New York City. The program was revised in the 1980s to help fund low-income housing, and on the eve of 2008, revised further just as the hot real estate market started to cool.

The most significant elimination was a program that allowed developers of low income units to raise funds for their projects by selling tax abatement certificates to developers of market-rate units, temporarily reducing their tax burden.

“My question is if we knew what we know now, would we have made those changes? I think the answer for most people is we wouldn't have and as a result 421 needs to be revisited,” says President Steven Spinola of the Real Estate Board of New York.

Spignola says the elimination of the certificate program puts both luxury and affordable housing projects in jeopardy. He also says developers who rushed to break ground before the changes are now seeing their projects grind to a halt due to the credit crisis.

“If these projects stop, it means construction jobs stop, so we will have fewer construction people working, it means that less taxes will be paid,” says Spignola. “It means that material won’t be bought and it means that we will be adding to the recession instead of helping to build our way out of it.”

While most agree the city is experiencing a slow down in construction, not everyone feels the problem or solution can be tied to changes in the tax code.

”If that were the case this real estate crisis would be solely isolated to New York City, and it's not even nationwide, it's global,” says Brooklyn Councilman Erik Martin Dilan, chair of the City Council's Housing and Buildings Committee. “So I think there are larger fundamental problems.”

In light of the current economic conditions, Dilan says he would be open to revisiting the issue.

Meanwhile, Brooklyn Assemblyman Vito Lopez says he has not yet been approached by REBNY about their concerns but stands by the decision to eliminate the certificates program.

“I'm not interested, even if it means no housing is built, to build luxury housing,” says Lopez. “What I'm concerned with as a representative is what happens to the poor and working poor.”

Lopez says the new system, which calls for a mix of both affordable and market-rate units in the same building, will result in working class New Yorkers living alongside millionaires, rather than being segregated to other parts of town.